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Tag: water

Contracts versus Trust for Transfers of Nature’s Services: equity and efficiency in resource allocation and environmental provision

Alexander Pfaff, Maria Alejandra Velez, Amar Hamoudi, Renzo Taddei, Kenneth Broad
Water Resources & Economics 2018

Managing natural-resource allocation and environmental externalities is a challenge. Institutional designs are central when improving water quality for downstream users, for instance, and when reallocating water quantities including for climate adaptation. Views differ on which institutions are best: states; markets; or informal institutions. For transfers of ecosystem services, we compare informal trust-based institutions to enforced contracts, both being institutional types we observe commonly in the field. The trust-based institutions lack binding promises, thus ecosystem-services suppliers are unsure about the compensation they will receive for transferring services to users. We employ decision experiments given the shortcomings of the alternative methods for empirical study of institutions, as well as the limits on theoretical prediction about behaviors under trust. In our bargaining game that decouples equity and efficiency, we find that enforced contracts increased efficiency as well as all measures of equity. This informs the design of institutions to manage transfers of ecosystem services, as equity in surplus sharing is important in of itself and in permitting efficient allocation.

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Framed field experiment on resource scarcity & extraction: path-dependent generosity within sequential water appropriation

Alexander Pfaff, Maria Alejandra Vélez, Pablo Andres Ramos, Adriana Molina
Ecological Economics 120 (2015) 416–429

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How one treats others is important within collective action. We ask if resource scarcity in the past, due to its effects upon past behaviors, influences current other-regarding behaviors. Contrasting theories and empirical findings on scarcity motivate our framed field experiment. Participants are rural Colombian farmers who have experienced scarcity of water within irrigation. We randomly assign participants to groups and places on group canals. Places order extraction decisions. Our treatments are sequences of scarcities: ‘from lower to higher resources’ involves four rounds each of 20, 60, then 100 units of water; ‘from higher to lower resources’ reverses the ordering. We find that upstream farmers extract more, but a lower share, when facing higher resources. Further they take a larger share of higher resources when they faced lower resources in earlier rounds (relative to when facing higher resources initially). That is inconsistent with leading models of responses to scarcity which focus upon one’s own gain. It is consistent with lowering one’s weight on others to, for instance, rationalize having left them little. Our results suggest that facing higher scarcity can erode the bases for collective actions. For establishing new institutions, timing relative to scarcity could affect the probability of success.


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Evolution of households' responses to the groundwater arsenic crisis in Bangladesh: information on environmental health risks can have increasing behavioral impact over time

Soumya Balasubramanya, Alexander Pfaff, Lori Bennear, Alessandro Tarozzi, Kazi Matin Ahmed, Amy Schoenfeld, Alexander van Geen
Environment and Development Economics 19: 631–647

PDF link iconA national campaign of well testing through 2003 enabled households in rural Bangladesh to switch, at least for drinking water, from high-arsenic wells to neighboring lower arsenic wells. We study the well-switching dynamics over time by re-interviewing, in 2008, a randomly selected subset of households in the Araihazar region who had been interviewed in 2005. Contrary to concerns that the impact of arsenic information on switching behavior would erode over time, we find that not only was 2003–2005 switching highly persistent but also new switching by 2008 doubled the share of households at unsafe wells who had switched. The passage of time also had a cost: 22 per cent of households did not recall test results by 2008. The loss of arsenic knowledge led to staying at unsafe wells and switching from safe wells. Our results support ongoing well testing for arsenic to reinforce this beneficial information.


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Unequal Information, Unequal Allocation: bargaining field experiments in NE Brazil

Alexander Pfaff, Maria Alejandra Velez, Renzo Taddei, Kenneth Broad
Environmental Science & Policy 26 (2013) 90-101

PDF link iconWe assess how unequal information affects the bargaining within resource allocation, a stakeholder interaction that is critical for climate adaptation within the water sector. Motivated by water allocation among unequal actors in NE Brazil, within Ceara´ State, we employ ‘ultimatum’ field experiments in which one participant lacks information. We find that, despite having veto power, the less informed are vulnerable to inequity. When all are informed, we see a typical resource split (60% initiator–40% responder) that balances an initiator’s advantage with a responder’s willingness to punish greed. When instead responders have only a resource forecast upon which to base decisions, the fully informed initiators get 80% of resources for conditions of resource scarcity. Thus, despite each of the stakeholder types having an unquestioned ‘seat at the table’, information asymmetries make bargaining outcomes more unequal. Our results are widely relevant for adaptation involving the joint use of information, and suggest that equity can rise with dissemination of scientific outputs that are integral in adaptation.


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Impact of a randomized controlled trial in arsenic risk communication on household water-source choices in Bangladesh

Lori Bennear, Alessandro Tarozzi, Alexander Pfaff, Soumya Balasubramanya, Kazi Matin Ahmed, Alexander van Geen
Journal of Environmental Economics and Management 65 (2013) 225–240

PDF link iconWe conducted a randomized controlled trial in rural Bangladesh to examine how household drinking-water choices were affected by two different messages about risk from naturally occurring groundwater arsenic. Households in both randomized treatment arms were informed about the arsenic level in their well and whether that level was above or below the Bangladesh standard for arsenic. Households in one group of villages were encouraged to seek water from wells below the national standard. Households in the second group of villages received additional information explaining that lower-arsenic well water is always safer and these households were encouraged to seek water from wells with lower levels of arsenic, irrespective of the national standard. A simple model of household drinking-water choice indicates that the effect of the emphasis message is theoretically ambiguous. Empirically, we find that the richer message had a negative, but insignificant, effect on well-switching rates, but the estimates are sufficiently precise that we can rule out large positive effects. The main policy implication of this finding is that a one-time oral message conveying richer information on arsenic risks, while inexpensive and easily scalable, is unlikely to be successful in reducing exposure relative to the status-quo policy.

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The Advantage of Resource Queues over Spot Resource Markets: decision coordination in experiments under resource uncertainty

Miguel Fonseca, Alexander Pfaff, Daniel Osgood
Amer. J. Agr. Econ. 94(5): 1136–1153; doi: 10.1093/ajae/aas065

PDF link iconFarmers have to make key decisions, such as which crops to plant or whether to prepare the soil, before knowing how much water they will get.They face losses if they make costly decisions but do not receive water, and they may forego profits if they receive water without being prepared.We consider the coordination of farmers’ decisions, such as which crops to plant or whether to prepare the soil when farmers must divide an uncertain water supply. We compare ex-ante queues (pre-decision) to an ex-post spot market (post-decision & post-rain) in experiments in rural Brazil and a university in England. Queues have greater coordination success than does the spot market.


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